Correlation Between ProShares Ultra and Invesco BulletShares

Can any of the company-specific risk be diversified away by investing in both ProShares Ultra and Invesco BulletShares at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining ProShares Ultra and Invesco BulletShares into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ProShares Ultra Semiconductors and Invesco BulletShares 2029, you can compare the effects of market volatilities on ProShares Ultra and Invesco BulletShares and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in ProShares Ultra with a short position of Invesco BulletShares. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Ultra and Invesco BulletShares.

Diversification Opportunities for ProShares Ultra and Invesco BulletShares

-0.51

Correlation Coefficient

ProShares Ultra  Invesco BulletShares

Excellent diversification

The 3 months correlation between ProShares and Invesco is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Ultra Semiconductors and Invesco BulletShares 2029 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco BulletShares 2029 and ProShares Ultra is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on ProShares Ultra Semiconductors are associated (or correlated) with Invesco BulletShares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco BulletShares 2029 has no effect on the direction of ProShares Ultra i.e., ProShares Ultra and Invesco BulletShares go up and down completely randomly.

Pair Corralation between ProShares Ultra and Invesco BulletShares

Considering the 90-day investment horizon ProShares Ultra Semiconductors is expected to generate 13.49 times more return on investment than Invesco BulletShares. However, ProShares Ultra is 13.49 times more volatile than Invesco BulletShares 2029. It trades about 0.06 of its potential returns per unit of risk. Invesco BulletShares 2029 is currently generating about 0.04 per unit of risk. If you would invest  5,592  in ProShares Ultra Semiconductors on September 12, 2024 and sell it today you would earn a total of  518.00  from holding ProShares Ultra Semiconductors or generate 9.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

ProShares Ultra Semiconductors  vs.  Invesco BulletShares 2029

ProShares Ultra Semi

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares Ultra Semiconductors are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, ProShares Ultra exhibited solid returns over the last few months and may actually be approaching a breakup point.

Invesco BulletShares 2029

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco BulletShares 2029 are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable primary indicators, Invesco BulletShares is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with ProShares Ultra and Invesco BulletShares

The main advantage of trading using opposite ProShares Ultra and Invesco BulletShares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares Ultra position performs unexpectedly, Invesco BulletShares can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Invesco BulletShares will offset losses from the drop in Invesco BulletShares' long position.

The idea behind ProShares Ultra Semiconductors and Invesco BulletShares 2029 pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.